Meriden Retirement Board Update
Tuesday, April 10, 2001
Overview
Despite explosions of short-covering, the stock market continues to struggle through a truly dismal cycle in which even the most hardy souls have been selling into rallies. “Calling the bottom” is a dangerous game. It is clear that the markets have been trying to stabilize for much of the past month – and doing very poorly. While it is true that many great stocks are “oversold” today, skepticism dominates the market and perceived bargains today become even better bargains tomorrow. The Fed is likely to cut rates again. The Congress and the White House will agree on a tax package. And earnings reports will once again exceed analysts’ expectations. But we don’t know when.
Individuals are trying to ride out the storm, while institutional managers are either riding the daily trading cycles or rearranging the furniture. A few have prematurely called bottom. But even the 400 point Dow advance last Thursday was quickly dismissed as a trading or short-covering rally and not a buying signal for the market as a whole.
Meriden Retirement Funds
The Meriden Retirement funds have suffered with the market, despite the defensive steps of the past few months. The Dow Industrials have lost another 500 points (4.8%) since our March meeting and the NASDAQ dropped 300 points (about 14%) in a month. Meriden’s assets fell an additional 2.9% in the period. City Employees Retirement accounts now total $119 million and the Police/Fire funds, $86 million. Market value losses do not endanger the benefits of any Meriden employee or retiree. However, the loss in market value of the underlying asset base makes recovery a more difficult challenge.
Patrick J. Sheehan
Gerald H. Glass
A.G. Edwards & Sons, Inc.
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